Noise

Categories: Metrics, Trading

You’re on a phone call. You can hear the guy on the other end of the line pretty well. But there’s this crackling sound. It’s kinda always there. You still totally got what the other guy was saying. But that crackling made the call kind of annoying.

It’s noise. And that’s how noise works in the trading of securities, more or less.

The transaction goes through. You get the 800 shares of MSFT you wanted. But you paid a penny extra per share than you thought you would. So what’s 8 bucks among friends? It’s just noise. How’d it get there? Eh, the broker widened the spread a penny or took that Lincoln as a bit more commish. But who really cares? It’s just noise. Ignore it.

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